See Analytics of Systemic Crises and the Role of Global Financial Safety Nets, IMF Policy Paper, May 31, 2011, for a broader discussion of the GFSN.
See Assessing Reserve Adequacy—Further Considerations, IMF Policy Paper, November 13, 2013.
See “The Fund’s Mandate—Future Financing Role,” PIN No. 10/124, and “The Fund’s Financing Role—Reform Proposals on Liquidity and Emergency Assistance and the Review of the Flexible Credit Line and Precautionary Credit Line,” PIN No. 11/152.
See Table 1 of the Stocktaking the Fund’s Engagement with Regional Financing Arrangements, IMF Policy Paper, April 11, 2013, pp. 11-12.
GRA Lending Toolkit and Conditionality—Reform Proposals, IMF Policy Paper, March 13, 2009; The Fund’s Mandate—Future Financing Role—Revised Reform Proposals and Revised Proposed Decisions, IMF Policy Paper, August 25, 2010; and The Fund’s Financing Role—Reform Proposals on Liquidity and Emergency Assistance, IMF Policy paper, October 28, 2011.
Some lessons could be drawn from the (quite successful) efforts made since the late 1990s to overcome Fund stigma in low-income countries—including the value of concerted engagement by Fund staff and management,supported by well-designed material that is accessible and tailored to the target audiences. Policy Support Instruments also bolstered the Fund’s image in frontier LICs.
In addition, consistent with the existing legal framework, including the Fund’s Transparency Policy, to the extent that any list would be produced, there would be voluntary but presumed publication. If a member were to object to publication, the Fund’s options would include either omitting the member from the published list, or not publishing a list at all.
Upfront measures, for the purpose of this paper, refer to measures that are taken by the authorities on their own initiatives but fall short of macrocritical measures used as a basis for qualification. Such upfront measures are different from prior actions, which are part of conditionality aimed at addressing the remaining vulnerabilities after qualification.
While FCL users cannot have remaining vulnerabilities upon entering an FCL arrangement, reviews conducted under FCL assess whether the member continues to qualify, and so will need to assess whether vulnerabilities have emerged since the approval of the arrangement.
If the Board endorses these approaches, a formal Board decision implementing this approach will be issued to the Board for consideration.
Prior actions only apply to PCL/PLL cases, as FCL arrangements are only subject to ex-ante conditionality in the form of qualification criteria.
IMF, 2011, Review of the Flexible Credit Line and Precautionary Credit Line, pp. 27-28.
While the issue of repeated use has not emerged in the context of the PLL, it is proposed that such an index could be used for both FCL and PLL arrangements.
In the FCL guidance note, such cushions are expressed in terms of “further potential downside risks on the BoP beyond those considered under the adverse scenario”. See The Flexible Credit Line—Guidance on Operational Issue, Attachment I.
This is particularly the case for the assumption of foreigners’ investment in peso-denominated sovereign bonds, which accounts for almost half of the financing gap under the adverse scenario. A net outflow under this category is assumed under the adverse scenario, which is in line with the peak-to-trough change but much more severe than the annual flows in 2008 and 2009, both of which are positive.
For the metric developed in Assessing Reserve Adequacy, the relevant threshold which minimizes the type I and type II prediction errors is 80 percent.
Since 2009, commitment fees are 15 bp for access up to 200 percent of quota, 30 bp for access between 200 and 1,000 percent of quota, and 60 bp above 1,000 percent of quota. The fees are refundable on amounts purchased during a 12-month period on a pro-rata basis.
The 25th percentile of the adjusted composite EMBI, a widely-used emerging market bond index, provides a rough approximation for the set of members that are potential FCL qualifiers. This metric has also been used to reflect the most credit worthy members in the context of reviewing the basic margin and surcharges (e.g., GRA Lending Toolkit and Conditionality - Reform Proposals and A New Rule for Setting the Margin for the Basic Rate of Charge).
The commitment fee is a form of charge under the Articles and, as such, is required to be uniform for all members (Article V, Section 8(d)). Differentiation of charges has been limited to relevant differences in member’s use of the Fund’s resources (e.g., having a different balance of payments need as addressed by a special facility).
Not only are access levels considerably smaller in precautionary SBAs—since 2002, only 4 precautionary SBAs have had average annual access above 200 percent of quota—they have generally not been renewed sequentially more than once. The recently approved third successive Romania arrangement is an exception, and ahead of the request some Directors raised questions about the appropriateness of a new program.
See, for example, Dias and Richmond (2007); Mecagni, Atoyan, Hofman, and Tzanninis (2007); and Hatchondo and Martinez (2013). Making the clock conditional on global or country-specific risk abatement assessments would raise important operational issues and signaling concerns.
The RFI replaced the previous instruments for emergency assistance for natural disasters and for post-conflict situations.
Similarly, since 2007, of the 34 cases of emergency assistance, only four are to non-PRGT eligible members.
The possible use of SMPs for this purpose was envisaged at the time of the establishment of the RFI. See The Fund’s Financing Role—Reform Proposals on Liquidity and Emergency Assistance, IMF Policy paper, October 28, 2011.